China has actively sought foreign direct investment (FDI) and technology to promote its modernization efforts and accelerate its export trade capabilities since its opening up in 1978. The total amount of incoming FDI rose from almost zero in that year to a high of about $110 billion in 1993 and $320 billion in 1999. Thus, China has become the world's third (second until 1998) largest recipient of FDI, and the largest recipient among developing countries. The FDI volume has hovered around $40-50 billion in each of the past several years. China expects significantly increased inflows over the next five years following the anticipated WTO accession that would bring about the removal of a number of restrictions on foreign investment.

At present China is on the threshold of crucial developments and policy decisions concerning FDI, and keen to increase the level, quality and source diversity of incoming FDI, particularly from the OECD Member countries. The Chinese government continues its efforts to adjust its policy and institutional framework, as well as investment promotion policies, to the requirements of the changing international and domestic circumstances.

With a view to contributing to this ongoing process and as part of the OECD-China programme of co-operation and policy dialogue, this conference was co-organized by the OECD and the Chinese Ministry of Foreign Economic Co-operation and Trade (MOFTEC). The objectives of the conference included: (i) a thorough discussion of the driving forces and economic effects of FDI on China's development; (ii) exchange of information and experiences on best FDI promotion practices, and (iii) elaboration of China's future FDI plans and policies.

The conference provided a timely forum to discuss the impact of FDI in China and investment promotion policies in a unique setting involving all the key players. It brought together a representative group of more than 120 participants from the OECD, non-OECD and the Chinese central government, provinces, business and investment groups, international organizations, and research institutes.

Conference participants acknowledged the value and timeliness of the Conference. They recognise that it contributed to a better understanding of the issues regarding FDI in China and different perspectives of OECD Member countries, China's central government and provinces, and foreign/Chinese investors, particularly at a time when China prepares for WTO accession and has been going through sweeping reforms. See the Summary Report for key points.